Many individuals and institutions use checks as a medium for monetary payment or for transferring monies to another party. Typically, an individual or institution opens a checking account with a financial institution. The financial institution provides the ability to write checks against monetary finds held in the checking account. When an individual or institution writes a check for a specified amount to another party, the party must then “cash” the check with the financial institution to obtain the specified amount on the check held by the financial institution in the individual or institution's checking account.
Large numbers of people, particularly low-wage earners, rely very heavily upon check cashing services to process their paychecks and cash advance services to manage their finances. Businesses that provide such services are an extremely valuable resource to consumers with limited liquidity and access to conventional banks. For millions of consumers, these services are a way of life. Consequently, the number of outlets offering these types of services has grown dramatically in recent years. People in need have turned such outlets into a kind of alternative banking sector.
There may be some risks involved with check-cashing transactions. Generally, check cashing services are provided from a bullet-proof enclosure. An employee of the check cash service often sits within the enclosure and determines whether to cash a customer's paycheck by referencing a computer database that includes information about the customer (“the payee”) and the customer's employer (“the payor”). The employee also may contact the payor's bank in some circumstances. If the check cash service employee decides to cash the paycheck, the employee collects an appropriate amount of cash from a cash drawer within the enclosure and provides the cash to the customer. This results in many situations of robbery. In some instances, a check-cashing transaction can involve fraud. For example, a person can fraudulently misrepresent their own identity as one authorized to cash a particular check. If the check is written by an unauthorized person for a specified amount and cashed by the financial institution, the monetary funds held in the checking account may be wrongfully taken by the unauthorized person. In another instance, a person can fraudulently create a check and attempt to cash the fraudulent check. Again, monetary funds held in a checking account may be wrongfully taken by the person using the fraudulent check. Thus, a need exists for systems and methods for authenticating a check in a check-cashing transaction.